Supermarkets 'fixed dairy prices'

[Conserned Consumer]

Source: BBC NEWS | Business | Supermarkets 'fixed dairy prices'

The UK's big four supermarkets and dairies colluded to keep the price of dairy goods artificially high, the Office of Fair Trading (OFT) has said.

The price-fixing deal led to consumers overpaying for milk, cheese and butter by an estimated £270m, the OFT said.

Asda, Tesco, Morrisons, Sainsbury's and processors including Dairy Crest and Arla were involved, the OFT said. The supermarkets have denied the claims.

If found guilty of price fixing, the firms could face heavy fines.

Last month, British Airways was fined almost £121.5m by the OFT after it admitted collusion in fixing the prices of fuel surcharges.

"This is a very serious case," said OFT executive director Sean Williams. "This kind of collusion on price is a very serious breach of the law."

According to the OFT, stores and processors had already been warned the practice would limit competition and raise prices.

'Deterrent'

Mr Williams added that the watchdog would ensure it used its powers to punish such behaviour and "deter other businesses from taking such actions".

The Competition Act of 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK.

The OFT has written to the big four supermarkets as well as processors Arla, Dairy Crest, Lactalis McLelland, The Cheese Company - part of Milk Link - and Wiseman setting out its findings.

It is now awaiting their responses to the claims - covering 2002 and 2003 - and any objections.

Morrisons said it was too early to comment fully, but added the group had never been involved with any of the actions mentioned by the OFT.

It also said that any Safeway involvement was another issue as it would have come prior to the chain's acquisition by the group.

Tesco and Asda added they would "vigorously defend" any claims it had not acted in the best interest of shoppers.

'No rip-off'

The British Retail Consortium (BRC) insisted there had been no attempt to "rip off the public" adding prices had been raised at the time to help ease pressure on farmers hit by low milk prices.

"What we were trying to do was to ensure that at least we could get the farm gate price up a bit to help preserve the supply line," BRC director general Kevin Hawkins told the BBC.

However, Sean Rickard, a consultant to the dairy industry and former chief economist at the National Farmers' Union, questioned whether farmers had actually seen the benefit of the price increases.

"If one looks back at the data, it does appear that there does seem to have been an increase in retail prices, even an increase in processors' margins, but the dear old dairy farmers really saw no tangible benefit, no lasting benefit from any such move," Mr Rickard added.

The OFT said it was "committed to sorting out the case as soon as possible," and hoped to issue a final decision by late 2008, if not earlier.

[Astrocat]

I think the world would be a better place if massive subsidisation were no longer given to the 'dear old dairy farmers'.

It is very unlikely that the 'artificially inflated' end price was as high as the 'real' price of the dairy products (ie the price they would be without their enormous subsidies) - so it's hardly a big deal where cost to the consumers is concerned, I reckon.

The real issue is supermarket dominance, and I feel that IS a big problem.

But after the amount of criticism i have come under for trying to explain why it is not good to be casual and have a short-term view, when it comes to forming an opinion about that....
It seems to me that a lot of people will encourage supermarket dominance when it has selfish benefits (perceived convenience and cheap price benefits), often mocking those who try to explain that once supermarkets have demolished the competition they will have a clear road for as many price hikes as they want, and who try to advocate that people would be well advised to consider that.... but even so, many of them will turn around and complain then all the same, when they are caught by the negative side of it as outlined above.

If hordes of people choose to shop at supermarkets instead of smaller shops in order to save enough money every week to have broadband internet, Sky TV and/or a steady supply of fancy pre-made fags, causing those local businesses to close from lack of demand ...... well, what did they think would happen as a result of that ?

I'm not saying that everybody who shops in supermarkets is like that, but it seems clear to me that mobs of them ARE like that, and there seem to be enough people like that, that they are probably the main driving force in the market where this is concerned.

[Anthony Butcher]

Originally Posted by Astrocat

I think the world would be a better place if massive subsidisation were no longer given to the 'dear old dairy farmers'.

As long as Britain is in the EU, we don't really have control of our own farming industry. I am not 100% sure on the current situation, but I think that the CAP determines the subsidies received, not the British government (I could be wrong though).

And if the subsidies were removed, then all dairy farming in this country would pretty much cease because it would become so expensive in comparison to subsidised milk from France and Poland.

[Astrocat]

I am not 100% sure on the current situation, but I think that the CAP determines the subsidies received, not the British government (I could be wrong though).

What i said still stands true.

The UK government have lots of control over their subsidisation - as demonstrated by their own decision to spend billions of ££ on massive subsidisation of Foot & Mouth outbreaks and suchlike.

The cost of animal food is subsidised, the cost of waste disposal is subsidised, the cost of pollution control is subsidised, business-related risks (ie foot n mouth) are subsidised.... and even after all of that there's a big subsidy on the final end price.

And if the subsidies were removed, then all dairy farming in this country would pretty much cease because it would become so expensive in comparison to subsidised milk from France and Poland.

Oh no, what a shame that would be !


Bear in mind that i said 'the world' , there.

[Astrocat]

It's probably also worth noting that the UK government has had the flesh/dairy/egg industries subsidised up to the eyeballs since long before the EU was ever formed.

So even if the UK government were now the EU's lapdogs...... regarding this issue, they are not being made to do anything which they would not be enthusiastically doing themselves (and indeed, already were)